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Rank and Yank at Enron 

Or, the fine art of bankruptcy

Wednesday, Jan 9 2002
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When the Houston-based energy giant Enron filed for Chapter 11 on December 2 -- ravaging most of its employees, even as its bosses rolled in hundreds of millions -- it seemed that Bush would finally have to pay the piper. Enron was his biggest financial backer (over $2 million), its CEO, Kenneth Lay, is one of his country-club pals (the president calls him “Kenny Boy”), and the current administration is so enmeshed with the company that the relationship is, if not demonstrably criminal, profoundly corrupt.

But so far Bush is getting away with it. Only one journalist has had the guts to ask him about the bankruptcy -- naturally, the president prevaricated -- and nobody had the guts to follow up. Which isn’t to say that Bush‘s dodgy links to Enron have gone unnoticed. Congressional investigations have been called by dreary Joe Lieberman and sharp Henry Waxman; Robert Scheer keeps pounding away at it in the L.A. Times. Still, the story hasn’t yet developed what media types insist on calling traction. Now I would hardly expect The Wall Street Journal to offer an expose of White House evildoing (though I‘d enjoy some public self-flagellation at its failure to grasp that Lay was the Wizard of Oz). But I would hope that papers like The New York Times and the Washington Post would devote as many resources to scrutinizing Bush and Enron as they did to Bill Clinton and Madison Guaranty.

After all, the Enron saga offers all the sprawling comic richness and icy moral clarity of a Tom Wolfe novel. Back in the mid-’80s, it was just a dingy little gas-pipeline company. But capitalizing on the Reagan era‘s vogue of deregulation, Enron reinvented itself, turning into a behemoth that traded in energy rather than merely providing it. By 2000, it had become the poster boy for the benefits of deregulation and limited government oversight. Here was a $60 billion concern that smugly called itself the “World’s Leading Company.” And why not? Although Enron had a low public profile -- have you ever even seen its tilted “E” logo? -- it was idolized by financial publications. And like a tumor, it was growing inexorably bigger, even building pipelines and plants in Argentina, Bolivia, Brazil, India, Mozambique, the Philippines and China. Meanwhile, back in Houston, the corporate hotshots behaved as if the word hubris hadn‘t yet been translated into Texan.

In a superb article in the December 9 Houston Chronicle, reporter Greg Hassell offered a portrait of Enron’s glory days, laying bare a gaudy corporate culture that was busy readying its vanities for the bonfire: Beyond the in-building health club and free Starbucks coffee, silver Porsches became an obligatory parking-lot status symbol, and traders were known to freak out when their annual bonus was only half a million bucks. This conspicuous consumption was encouraged by an evangelical leadership that one former executive compared to the Taliban -- either you were for the company or you were an infidel. To call down an Enron fatwa, you needed merely ask for proof of its extravagant claims of profitability (proof its accountants obviously didn‘t seek very diligently).

As Hassell explains, Enron focused on deals that looked lucrative in the short term -- “My bonus is based on what I do this quarter,” shrieked one of its agonized traders -- even if they were long-term disasters. Such shortsightedness didn’t just sap the company, it led to an abject lack of social responsibility. When Enron wasn‘t driving up energy prices in California last year, it was buying up, then destroying Oregon’s homegrown energy system; in India, human-rights groups have compelling evidence of physical violence against villagers who opposed new plants by Enron subsidiary Dabhol Power Co. This same casual amorality turned office politics into one endless episode of Corporate Survivor, in which a policy nicknamed “rank and yank” had employees give one another annual ratings, with the bottom 15 percent being fired. In such a cutthroat culture, it‘s hardly surprising that Enron execs would sell off their own shares for a fortune and prohibit underlings from doing the same, even when it became obvious that Enron stock was sinking faster than a Soviet sub. Such is the fine art of bankruptcy.

Naturally, many politicians buried their snouts in Enron’s trough, some of them Democrats, but none so deeply as the Bush family and their associates. It started with Papa Bush, whose secretary of state, secretary of commerce and director of operations for the Joint Chiefs of Staff all eventually joined the Enron payroll. And it continued with his son, who received $500,000 from Enron for his first gubernatorial campaign, and with Kenneth Lay‘s blessing, used an Enron company jet when he ran for president. No doubt coincidentally, “Kenny Boy” was named to Bush’s transition team and helped interview candidates for the Federal Energy Regulatory Commission; during the vice president‘s secret hearings on energy policy, Dick Cheney met privately with Lay and other Enron executives, the only company to be granted such a favor. At the moment, Bush’s chief economic adviser, Larry Lindsey, and top trade negotiator, Robert Zoellick, have both served as advisers to Enron, while Secretary of the Army Thomas White Jr. was an Enron exec before joining the administration (evidently he sold his stock in time).

Nobody wants to say it during wartime, but the cozy yet ruthless Texas business culture that produced Enron also produced our president. Bush takes pride in working like a CEO, and if you study his behavior, you find him duplicating, almost exactly, the culture of Enron. He displays the same obsession with loyalty (his number-one virtue), the same habit of dishonest, short-term accounting (think of his lies about those tax cuts), the same blithe disregard for ordinary workers (his post--September 11 economic proposals all aimed at helping corporations) and the same pitiless certainty he‘s on the side of the free-market angels.

What may be the scariest about Enron’s disastrous failure is that neither Bush nor other professional free marketeers seem to find anything scary about America‘s seventh biggest company being a hollow shell -- and nobody having a clue. Not the investors, not the media, not the government overseers, not even (if you believe him) Kenneth Lay. In fact, several weeks after the bankruptcy, The Wall Street Journal’s Susan Lee wrote a column that examined Enron‘s calamitous fall and concluded that, once again, the free market had done its job -- it let the company collapse. “And thus,” she cheerily ended her piece, “the story of Enron is, so far, a success story.”

I’d hate to hear what she has to say about the Donner Party.

* * *

You have to give this to conservative ideologues: Unlike the liberal media, they‘re always on the case. As soon as it came out that John Walker Lindh hailed from Marin County, right-wing pundits began licking their chops, eager to turn an anomaly into a symbol. Not only did Fox News trot out all the Marin cliches (cue the bearded weirdo in the hot tub!), but the National Review suggested that Walker wasn’t merely a young fool (or traitor) but an exemplar of what‘s morally vacuous about post-’60s America.

On December 10, The Wall Street Journal carried a piece by angry black conservative Shelby Steele, who treated Marin as if it were some bizarre, interplanetary Gomorrah rather than a community just up the road from Palo Alto, the liberal college town where he himself works. Although Steele made his reputation by arguing that an individual‘s failings shouldn’t be blamed on his social background -- in particular, that African-Americans should focus less on past victimization than on the content of their own character -- he eagerly pinned Walker‘s embrace of fundamentalism on Marin’s cultural relativism, which, he claimed, teaches its young that the hatred of America is actually idealism. (If only Walker had been raised in a nice Southern town where he could have channeled his theocratic impulses into bombing abortion clinics.)

Now, there‘s something comical about bashing liberals for producing Islamic holy warriors dedicated to the destruction of liberalism. In fact, an article like Steele’s is worth mentioning only as an example of a familiar conservative tactic: You take some piece of “shocking” news, then twist it to pummel a group or ideology you don‘t like. Thus, when poor, mad Susan Smith drowned her two kids back in the ’90s, Newt Gingrich didn‘t sweat the details -- he declared that liberal values led her to do it.

The problem, of course, is that blaming Marin for Walker’s religious idiocy or liberalism for child murder is to make an argument so transparently fatuous that a high school debater could pick it apart during homeroom. If liberal values prompted Smith to kill her children, why isn‘t Santa Monica littered with small corpses? If the culture of Marin was the reason for Walker’s fanaticism, why didn‘t anyone else there (let alone Berkeley) join the Taliban? The right fulminates endlessly about liberalism’s moral bankruptcy, but its own penchant for the ideological blame game is the intellectual version of Chapter 11.

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